Minister of Foreign Affairs and Justice, Prison Affairs & Constitutional Reform, President’s Counsel Ali Sabry, underscored the gravity and challenges of renegotiating with the International Monetary Fund (IMF), highlighting that such efforts are fraught with difficulties and often unsuccessful.
The Minister pointed out that re-engaging in negotiations with the IMF could jeopardize the next scheduled tranche in December, as well as future disbursements from the World Bank (WB) and the Asian Development Bank (ADB). He warned that between December 2024 and January 2025, the country could lose between USD 1.2 billion and 1.3 billion, leading to potential further instability.
These remarks were made by Minister Ali Sabry during the ‘Two Years of Progress and Advancement’ news conference held at the Presidential Media Centre on the 28th.
In his statement, the Minister reflected on the pivotal role assigned to the Ministry of Foreign Affairs in 2022, given the country’s challenging circumstances. The Ministry was tasked with rebuilding strained foreign relations, restoring the trust of the international community, and using international ties to bolster the national economy.
After two and a half years of committed effort, the Minister noted that the country has achieved stability, with the nation’s international standing reflecting the positive outcomes realized domestically. He attributed these achievements to the leadership of President Ranil Wickremesinghe.
A significant milestone mentioned was the securing of agreements with 17 countries for debt restructuring, accomplished while preserving Sri Lanka’s foreign policy, identity, and sovereignty. The Minister highlighted that Sri Lanka’s swift recovery from the economic crisis has become a global model, with countries like Pakistan, the Maldives, and Bangladesh seeking advice on economic revitalization from Sri Lanka. The leadership of President Wickremesinghe in stabilizing the nation has garnered international recognition.
Of the five countries—Lebanon, Venezuela, Argentina, Zimbabwe, and Greece—that have faced similar economic crises, only Greece has managed to recover, taking 12 years to do so. Sri Lanka, however, has distinguished itself by overcoming an economic crisis in a remarkably short period.
Minister Sabry also cautioned against the misleading narratives of those advocating for IMF renegotiations for narrow political gains. He wished “good luck” to anyone considering pursuing this complex and often unsuccessful process.
The Minister further elaborated that Sri Lanka officially communicated its intent to apply for an extended-fund facility in March 2022, with the first tranche arriving in March 2023. It took a full year to agree on the Debt Sustainability Analysis (DSA), which is based on five key parameters. These include reducing the current national debt from 133% of GDP to 95%, lowering the current GDP allocation for foreign loan settlement from 9.3% to 4.5%, achieving a primary budget surplus of 2.1%, and increasing tax revenue to 15% of GDP. These targets are now legally binding and not easily changed, as any attempt to alter them would require renegotiation, a process that would take at least another year.
The Minister warned that if renegotiation occurs, the IMF is likely to withhold the next USD 400 million tranche due in December. If that happens, the World Bank will also withhold its USD 400 million disbursement, and the ADB would not release its USD 500 million allocation. The resulting loss of USD 1.2 billion to USD 1.3 billion between December and January would destabilize the country, leading to potential currency devaluation and inflation.
In addition, the Ministry of Foreign Affairs has undertaken various initiatives to support and coordinate the country’s economic recovery. The Ministry has played a key role in advancing the Global South’s priorities in multilateral forums and effectively addressing challenges related to human rights issues on a global scale. Sri Lanka has also been elected to four United Nations mechanisms, including the Committee on the Elimination of Discrimination against Women for 2022-2024, the Committee on the Protection of the Rights of Migrant Workers and Members of Their Families, the UNESCO Executive Board for 2023-2027, and the Economic and Social Council for 2025-2027.
A recent article by ForeignPolicy.com evaluated Sri Lanka’s foreign policy, noting that despite the global power struggle, the country has managed to maintain strong relations with all major powers, a feat largely credited to President Wickremesinghe’s knowledge, experience, and personal connections. He is recognized as the only leader in Sri Lanka capable of directly engaging with any head of state globally.
The President’s directive to maintain the independence of the Foreign Service was also emphasized. This has allowed the Foreign Service to operate with greater autonomy, surpassing even the independence achieved during the tenure of former Minister Lakshman Kadirgamar.
State Minister of Foreign Affairs, Tharaka Balasuriya, added that negotiations with Myanmar and Thailand have led to the release of 28 of the 55 Sri Lankans imprisoned in Myanmar for cybercrimes, with ongoing efforts to secure the release of the remaining individuals. Additionally, the Ministry has facilitated the return of around 70 retired war heroes who had joined the Russian army, ensuring they receive the benefits they are entitled to. The Ministry has also been instrumental in repatriating Sri Lankans who found themselves in distress after traveling to countries like Dubai and Oman on tourist visas.
Effective foreign policy and a competent team are crucial to these activities, and President Wickremesinghe has ensured that the Ministry can engage this team free from political influence, allowing full leverage of the country’s foreign policy.
The event was attended by several officials, including Aruni Wijewardena, Secretary of the Ministry of Foreign Affairs, and other Ministry officials.
